DB week 1 Small business - Essay Example

Free enterprises promote economic growth in that the entrepreneurs invest in different sectors of the economy. The welfare of the people is likely toimprove since they can sustain themselves through the proceeds obtained from their business ventures. In other words, unemployment is reduced, an indicator that the economy is functioning well. This type of business also helps to bridge the gap created by large corporations which often overlook small segments of the consumers. The main advantage of a free-enterprise economy is that it promotes consumer spending since the consumers have a wide range of choices to make from the available goods and services offered in the market.

According to Stapelberg & Steyn (1988), this helps the money to flow back into the economy and this can sustain it. The other advantage is that the more money in circulation, the more revenue government can collect from the economy. This revenue is used for other services such as healthcare, education as well as infrastructure development and these are meant to improve the welfare of the citizens in a particular country. The other advantage is that competition is promoted and this helps to create a fine balance in the economy where there is no monopoly.

However, the disadvantage of a free enterprise is that these business people can develop a tendency of exploiting the consumers since they can charge whatever price they can think of. There is need for some form of regulation by the government in order to ensure that the interests of the consumers are protected. References Stapelberg, N.H. & Steyn, F. G. (1988). Economics: An introductory study. Cape Town: NHS Publishers.